USANA Health Sciences Announces Second Quarter 2008 Financial Results

Record Sales of $109.2 Million; EPS of $0.62

SALT LAKE CITY--(BUSINESS WIRE)--USANA Health Sciences, Inc. (NASDAQ: USNA) today announced its financial
results for the fiscal second quarter, ended June 28, 2008. The company
reported net sales of $109.2 million and earnings per share of $0.62,
which approximated the preliminary results for the second quarter
announced on June 18, 2008.

“We
are making this change to our guidance practice to focus on the
longer-term prospects of our business.”

Financial Performance

Net sales for the second quarter of 2008 increased by 1.5% to $109.2
million, compared with $107.5 million in the second quarter of the prior
year. This increase in net sales was primarily the result of new
incentive programs for the company’s
Associates and stronger foreign currencies. On a consecutive quarter
basis, net sales increased by 7.5%.

Earnings per share from continuing operations were $0.62 per share,
compared with $0.66 per share in the second quarter of 2007, a decrease
of 6.1%. This decrease in earnings per share for the quarter was due to
higher overall operating costs. On a consecutive quarter basis, earnings
per share increased by 34.8%. Notably, earnings per share in the second
quarter were reduced by $0.03 due to charges relating to the recently
terminated tender offer.

For the six months ended June 28, 2008, net sales increased by 1.2% to
$210.8 million, compared with $208.2 in the first six months of 2007.
Earnings per share from continuing operations were $1.08 in the first
six months of 2008, a decrease of 16.9%, compared with $1.30 in the same
period of 2007.

Regional Results

North America Region

During the second quarter of 2008, net sales in North America decreased
by 3.3% to $65.9 million, compared with the second quarter of the prior
year. Excluding changes in foreign currency, net sales decreased by
5.9%. This decrease was mainly due to lower-than-expected sales in the
U.S., where the number of active Associates declined by 7.7% on a
year-over-year basis. On a sequential quarter basis, however, net sales
increased by 4.1% in the U.S. and by 5.9% in North America.

Asia Pacific Regions

Net sales in the Asia Pacific regions, during the second quarter of
2008, increased by 9.9% to $43.3 million, compared with the second
quarter of 2007. Excluding changes in foreign currency, net sales
increased by 2.6% in these regions. This growth was primarily
attributable to increases of 44.9% in Hong Kong, 28.7% in Malaysia, and
11.7% in Taiwan. These sales increases were partially offset by a 3.8%
decline in Australia/New Zealand and a 3.3% decline in Singapore,
compared with the second quarter of 2007. On a sequential quarter basis,
net sales in the Asia Pacific regions increased by 10.2%.

“We were pleased to see our second quarter
financial results come in above our original expectations,”
said Dave Wentz, president of USANA Health Sciences. “Achieving
sequential quarterly sales gains in all but two of our 13 markets gives
me confidence that our business is starting to regain its upward
momentum. We will continue to focus on accelerating our top-line growth.”

Gil Fuller, the company’s executive vice
president and chief financial officer, said, “We
have made extra efforts this quarter to reduce overall corporate
spending. Additionally, the majority of the capital investments that we
have made to expand our corporate headquarters and regional facility in
Sydney, Australia are now largely behind us.”

Beginning today, the company is changing its practice for providing
financial guidance. USANA will no longer provide financial guidance for
its fiscal quarters. The company will, however, provide financial
guidance on an annual basis, which it will update periodically.
Commenting on this financial guidance, Fuller said, “We
are making this change to our guidance practice to focus on the
longer-term prospects of our business.”

Outlook

On July 21, 2008, the Company’s Compensation
Committee increased base salaries and issued significant equity grants
that vest over five years. These grants will replace annual grants that
the committee would otherwise issue during that time. These increases in
cash and equity compensation will reduce earnings per share for 2008 by
approximately $0.12. The committee believes that doing this will
increase shareholder value over the long-term by retaining and
motivating key management personnel.

The company believes that, for the full-year 2008, net sales will be
between $435 million and $445 million and earnings per share on a fully
diluted basis will be between $2.30 and $2.36. This earnings per share
estimate is based on a full-year effective tax rate of 36.5%.

Conference Call

USANA will hold a conference call and webcast to discuss this
announcement with investors on Wednesday, July 23, 2008 at 11:00 AM
Eastern Time. Investors may listen to the call by accessing USANA’s
website at http://www.usanahealthsciences.com.

About USANA

USANA develops and manufactures high-quality nutritional, personal care,
and weight management products that are sold directly to Preferred
Customers and Associates throughout the United States, Canada,
Australia, New Zealand, Hong Kong, Japan, Taiwan, South Korea,
Singapore, Mexico, Malaysia, the Netherlands, and the United Kingdom.
More information on USANA can be found at http://www.usanahealthsciences.com.

Safe Harbor

This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. Forward-looking statements in the foregoing
press release include, but are not necessarily limited to, references to
the expected outcome of initiatives and promotions planned by the
company, guidance given for future operating periods, and the company’s
belief regarding the future effect of incentive programs on the top-line
and on operating costs. Our actual results could differ materially from
those projected in these forward-looking statements, which involve a
number of risks and uncertainties, including reliance upon our network
of independent Associates, the governmental regulation of our products,
manufacturing and marketing risks, adverse publicity risks, and risks
associated with our international expansion. The contents of this
release should be considered in conjunction with the risk factors,
warnings, and cautionary statements that are contained in our most
recent filings with the Securities and Exchange Commission.

USANA Health Sciences, Inc.

Consolidated Statements of Earnings (Unaudited)

(In thousands, except per share data)

Quarter Ended

30-Jun-07

28-Jun-08

Net sales

$

107,542

$

109,208

Cost of sales

22,443

21,884

Gross profit

85,099

87,324

Operating expenses

Associate incentives

43,280

45,603

Selling, general and administrative

22,531

25,135

Research and development

902

618

Earnings from operations

18,386

15,968

Other income

(13

)

(65

)

Earnings from continuing operations before income taxes

18,373

15,903

Income taxes

6,966

5,755

Income from continuing operations

11,407

10,148

Loss from discontinued operations

(93

)

-

NET EARNINGS

$

11,314

$

10,148

Earnings per share - diluted

Continuing operations

$

0.66

$

0.62

Discontinued operations

$

-

$

-

Net Earnings

$

0.66

$

0.62

Weighted average shares outstanding - diluted

17,163

16,460

USANA Health Sciences, Inc.

Consolidated Balance Sheets (Unaudited)

(in thousands)

As of

As of

29-Dec-07

28-Jun-08

ASSETS

Current Assets

Cash and cash equivalents

$

12,865

$

9,982

Inventories

19,439

22,038

Other current assets

13,688

12,256

Total current assets

45,992

44,276

Property and equipment, net

52,061

60,163

Goodwill

5,690

5,690

Other assets

5,385

6,016

Total assets

$

109,128

$

116,145

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable

$

8,111

$

8,753

Other current liabilities

32,074

33,326

Total current liabilities

40,185

42,079

Line of credit

28,000

9,835

Other long-term liablilities

2,305

2,820

Stockholders' equity

38,638

61,411

Total liabilities and stockholders' equity

$

109,128

$

116,145

USANA Health Sciences, Inc.

Sales by Region

(in thousands)

Quarter Ended

30-Jun-07

28-Jun-08

(Unaudited)

(Unaudited)

Region

North America

$

68,156

63.4

%

$

65,921

60.4

%

Southeast Asia/Pacific

23,570

21.9

%

24,170

22.1

%

East Asia

11,631

10.8

%

15,057

13.8

%

North Asia

4,185

3.9

%

4,060

3.7

%

Consolidated

$

107,542

100.0

%

$

109,208

100.0

%

Active Associates by Region (1)

As of

30-Jun-07

28-Jun-08

(Unaudited)

(Unaudited)

Region

North America

104,000

58.5

%

96,000

56.8

%

Southeast Asia/Pacific

40,000

22.5

%

39,000

23.1

%

East Asia

28,000

15.7

%

27,000

16.0

%

North Asia

6,000

3.3

%

7,000

4.1

%

Total

178,000

100.0

%

169,000

100.0

%

(1) Associates are independent distributors of our products who also
purchase our products for their personal use. We only count as active
those Associates who have purchased product from USANA at any time
during the most recent three-month period, either for personal use or
for resale.

Active Preferred Customers by Region (2)

As of

30-Jun-07

28-Jun-08

(Unaudited)

(Unaudited)

Region

North America

71,000

89.9

%

69,000

89.6

%

Southeast Asia/Pacific

6,000

7.5

%

6,000

7.8

%

East Asia

1,000

1.3

%

1,000

1.3

%

North Asia

1,000

1.3

%

1,000

1.3

%

Total

79,000

100.0

%

77,000

100.0

%

(2) Preferred Customers purchase our products strictly for their
personal use and are not permitted to resell or to distribute the
products. We only count as active those Preferred Customers who have
purchased product from USANA at any time during the most recent
three-month period.